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Damodaran warns on SpaceX-OpenAI index fight
Damodaran warns SpaceX-OpenAI race could distort S&P 500 with trillion-dollar valuations. Index concentration risk grows as private giants eye public markets.
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Valuation professor Aswath Damodaran warned that the race between SpaceX and OpenAI to join the S&P 500 could produce a trillion-dollar distortion in the world's most powerful stock index, according to a report. The warning centers on the sheer size both private companies would carry if they went public.
SpaceX, the rocket-launch company, has been valued at about $180 billion in secondary trades. OpenAI, the artificial intelligence research lab behind ChatGPT, commanded a roughly $80 billion valuation in its latest funding round, though that number has climbed since. If either or both firms list on an exchange and are added to the S&P 500, their market caps would place them among the index's top holdings almost immediately.
Damodaran's concern is mechanical. Index funds tracking the S&P 500 would be forced to absorb billions of dollars of whatever new company appears, regardless of price. A trillion-dollar combined weight between SpaceX and OpenAI would crowd out established industrials, banks, and energy companies, shifting the index further toward growth and technology. The professor has long argued that passive flows amplify valuation extremes, and this case would be the largest test yet.